Another hurdle in the company's plans to get subscribers to pay more is concern over the company's viability as a business.

Ah, the May queen. Sirius has to pay back $350 million in XM bank debt in May. It also has a $300 million convertible tab due three months earlier, and a larger $400 million repayment by year's end. With more than $1 billion in repayments next year, the market seems to believe that the "spring clean" at Sirius XM will come in the form of filing for bankruptcy protection. That would likely wipe out its shareholders, but Sirius and XM would continue to broadcast during the reorganization.

Closed stores are a problem for Sirius XM. Its receivers haven't been selling briskly at the retail level, leaving the company to rely on incentivized auto manufacturers to push the factory-installed receivers. It also doesn't help that consumer electronics chains like Circuit City (NYSE: CC) that used to sell plenty of XM and Sirius receivers when they were hot a few holiday seasons ago, are closing down stores. Circuit City announced the closing of 155 stores this week.

The carmaker shift is fine, until you realize that General Motors (NYSE: GM) posted a whopping 45% plunge in U.S. auto sales last month. Adding insult to injury, have you seen the new GM Cadillac ads, promoting the car's 40-gig hard drive? Satellite radio and CD-ripping aren't the same, but it's just one more gadget to give a commuter less time to tune in -- and justify -- a satellite radio subscription.

The last laugh
With shares of Sirius XM down to $0.31 each, it's easy to assume the worst. In fact, I have. However, it's also easy to see the desperate bullish argument come together at this very inopportune moment for the company.

A consumer-facing company will do anything it can to avoid bankruptcy, to keep subscribers around. Survival will likely mean massive share dilution, but there is still upside to a company that was worth substantially more as a stand-alone company with a fraction of today's 18.6 million subscribers.

you guys dont think if they dilute the stock to pay off the remaining 250 mill the shorts wont put us in the teens?? Then your all nuts This stock is such a joke anything can happen.

So you're saying that if Sirius issued enough stock here to pay off the remaining $250 million -- causing dilution -- that it would drive the pps down to below $0.20?

Let's look at that on paper...

It's currently at $0.32 now and a drop to $0.19 is a drop of $0.13 total. That would be a drop of $416 million in market cap -- due to a dilution of $250 million? Seems a bit dramatic, don't you think?

If the stock wasn't ALREADY below its FAIR VALUE, I might agree somewhat with you... however, this stock is below its fair value -- so really, any equity for debt exchanges at this point will have very little effect on the market cap of this company. IMHO

I am looking for opinions if there is a belief that dilution to pay off Feb Converts is already built into this price at .30.

And I do not just mean the 50M paid down, but the balance of the 250M left to go.

It's absolutely built into this price. Bankruptcy is built into this price - as book value is in the mid .40 range. I'm still optimistic that there may not be further dilution for the February debt though. I have a feeling we could hear some positive news about February on Monday. I think the stock/debt exchange for the $50mil was part of a bigger deal for the whole amount. At least, that's what I'm hopin! Wouldn't that be sweet?